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How to Blend Families and Finances

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Remarriage is a wonderful example of American optimism. Among all couples saying “I do” each year, about one-third have said it at least once before.1 As a result, blended families are becoming the new normal, with four in 10 American adults having at least one step-relative.2

With careful planning, remarriage can blend debts, dependents and household expenses by taking these five steps:

Step 1: Sort out your financial situation

Having a frank talk about debts, expenses and obligations before any marriage is the best way to avoid trouble later on. This is doubly true for remarriages due to the complex dynamics of blended families. Will it be you or your partner who takes responsibility for child care payments or alimony? How will you split expenses for children from previous relationships? Put all your cards on the table—and make sure your partner does the same.

Step 2: Confirm your beneficiaries

Take the time to double-check that you’ve got the appropriate beneficiaries listed on all your accounts and policies. These designations typically override any instructions you’ve laid out in your will, so it’s critical that the paperwork be up-to-date. Spelling out your desires explicitly will go a long way toward heading off any problems—now and in the future.

Step 3: Think before you combine

Since blended families often have complicated financial situations, many remarried couples choose to keep their accounts separate, says Alex Seda, a SunTrust premier banker based in Longwood, Fla.

That’s particularly wise if you or your spouse come into the marriage with significant assets, whether they’re earmarked for retirement or a child’s college education. Spelling out those details in a prenuptial agreement may feel overly formal, but it can also foster peace of mind and clarity around personal and household finances. Remember your family’s special circumstances (and consider consulting a SunTrust financial advisor) as you draw up a plan that works for you.

Step 4: Break from the past

Joining families can be a good time to break bad financial habits. Were you lax about retirement savings in your previous relationship? Looking for a chance to establish a sensible household budget? Now is your chance to make a fresh start.

It’s also an opportunity to take an in-depth look at your accounts. “If you’re going through a major life change, like a new marriage, and it’s been more than a year since you’ve done a thorough review, it’s a great excuse to do so,” Seda says. “Too often, people wait 10 or 20 years—and a lot can change in that amount of time.”

Step 5: Think about the future

When families rearrange, so do goals and plans for the future. Remember to update your will and estate plans to reflect your new circumstances. Make sure you’re clear about who gets what when it comes to personal items, real estate and other assets; inheritance laws affecting blended families vary from state to state.

Disclaimers

1 http://ncfmr.bgsu.edu/pdf/family_profiles/file114853.pdf

2 "A Portrait of Stepfamilies," Pew Research Center, 2011

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